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Spam, HotStockChat, and the Pump n Dump

follow up to last week's stock scam story

Last week's stock scam alert and the 60-Second Window article hit some hot-buttons for readers. Thank you all for your feedback and comments. One reader from Portland, Oregon wrote:

> Ever-Glory International, whom you noted last week,
> continues to pump their penny stocks via spam email.
> They have spoofed my email and I get
> hundreds of bounce backs every day.
> I have contacted the company and
> their financial advisor. Of course, they are shocked.
> Ahhh, right.
> Clearly, a pump and dump stock scam.

A number of readers mentioned Ever-Glory, so we decided to take a look:

Ever-Glory International Group Inc. (symbol: EGLY.OB) is a garments manufacturing firm set in in Nanjing, China. They, or someone hoping to "pump and dump" EGLY stock sent a total of 84 spams in a four-day period -- all from different addresses, all with completely differrent subject lines and body copy. (The spammer replaced the "ohs" with zeros in all caps to try and evade spam filters: Ever-Gl0ry.) The spam made all kinds of various claims, primarily that we could expect at least a 200% increase in the value of the stock because of an upcoming PR campaign.

Stock Scams We decided to look in to see if a campaign in fact took place, and if it worked -- instead, we found a nose-dive. We can only surmise the criminals dumped their stock that day, sending it down more than 16%. (at right) Read the "Change in Control" notice and you'll see why.

During our week-long investigation, Ever-Glory wasn't the biggest loser. Some took more severe hits while others took only mild hits. None have recovered -- so investors are still upside-down.

Snagged in the web:In tracking down sources for the barrage of stock scams, we contacted web sites which were mentioned in some of the fraudulent emails. Most never reply. However, Tom Allinder, President of HotStockChat.com did indeed reply with the following:
      "We did not send out the emails. Someone using our name sent them out. The emails were sent from cisco.com and cimedia.com among others. We have identified them and are reporting them to the SEC."
See their notice at www.hotstockchat.com

How bad is it?

NASAA warnings and tips for avoiding stock scams

Organized in 1919, the North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection. NASAA is a voluntary association whose membership consists of 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.

NASAA writes:
      "With the Internet becoming a common part of daily life for increasing numbers of people, it should be no surprise that con artists have made cyberspace a prime hunting ground for victims. The Internet has turned from an information superhighway to a road of ruin for victims of cyber fraud. The Internet has made it simple for a con artist to reach millions of potential victims at minimal cost. Many of the online scams regulators see today are merely new versions of schemes that have been fleecing offline investors for years."

Key NASAA Links:

* NASAA's 2005 Top 10 Threats to Investors "If it sounds too good to be true, it usually is"
* Education and Awareness: The Best Defense Against Fraud
* How To Spot A Con Artist - Investing in securities is risky enough without worrying about whether your salesperson is going tofleece you. To be an informed investor, you must know what danger signs to look for. Some are subtle, and some are easier to spot.
* How To Avoid Becoming A Victim - Avoiding being hurt by a con artist is as easy as doing your homework -- before you invest.
* Contact your regulator (by state)
* How to complain

The first step in protecting yourself and your capital from mishandling and theft is to know what form that abuse may take. NASAA can help you identify the most common types of schemes, scams, and fraud. All investors and entrepreneurs need to know how to protect themselves. As a service site for a network of computer clubs known as "user groups" we urge all organizations to publish warnings and inform their memberships about online dangers. We urge those members to spread the word in their communities.

This week's stocks to avoid: In addition to Ever-Glory, these stocks also sent from at least two to as many as 60 spam Pump-N-Dumps, totalling more than 200 spams in a four-day period:
: China World Trade Corporation (CWTD)
: Consolidated Biofuels (CBIO.PK)
: Dark Dynamite Inc. DKDY
: FacePrint Global Solutions (FCPG.OB)
: Golden Apple Oil and Gas, Inc. (GAPJ)
: Grifco Intl. Inc. (GFCI)
: Gulf Petroleum Exchange, Inc. (GFPE)
: Infinex Ventures Inc. (IFNX)
: m-Wise (MWIS)
: Presidents Financial PZFC
: Remington Ventures Inc. (RMVN)
: The Solvis Group Financial Corporation (SLVG)

Please share your concerns or discoveries, we're listening.


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